Stock Market Index
Stock market indexes provide a consolidated view of how the market is performing. Stock indexes are updated constantly throughout the trading day to provide instant information.
The SENSEX and other indexes
The BSE SENSEX (SENSitive indEX)is a basket of 30 stocks representing a sample of large, liquid and representative companies. The base year of SENSEX is 1978-79 and the base value is 100. The index is widely followed by investors who are interested in Indian stock markets. During market hours, prices of the index scrip, at which trades are executed, are automatically used by the trading computer to calculate the SENSEX every 15 seconds and continuously updated on all trading workstations connected to the BSE trading computer in real time.
The BSE Sensex is not the only stock market index in India. The NSE has The NSE S&P CNX Nifty 50 index – a well diversified 50 stock index accounting for 24 sectors of the economy. While both SENSEX and NIFTY would give you an overall direction of the stock market there are other indices which track a particular sector.
For example – The NSE CNX IT Sector Index tracks companies that have more than 50% of their turnover (or revenues) from IT related activities like software development, hardware manufacture, vending, support and maintenance. So for those who are tracking the performance of IT Sector this index would become a benchmark for investing. Yet another example is the BSE BANKEX index which tracks the banking sector shares.
Indexes provide useful information including:
- Trends and changes in investing patterns.
- Snapshots, even if they are out of focus.
- Yardstick for comparison.
